Taking advantage of more stable economies, banks are venturing deep into sub-Saharan Africa
NOT so long ago, a cruel joke among international bankers was that sub-Saharan Africa was less an emerging market than a submerging one. Local bankers had no reason to change that impression; for all the political and economic turmoil, tiny and informal markets, and shabby infrastructure, they mostly made good money doing very little. Using low-cost deposits to buy high-yielding government bonds, they harvested some of the best net-income margins in the world. The corollary, of course, was that most Africans had no access to financial services.
Nowadays, the thinking is shifting. According to the IMF, Africa is enjoying its best period of sustained economic expansion since independence. Real GDP growth is expected to rise from 5.7% in 2006 to 6.1% this year and 6.8% in 2008. This good performance is partly driven by high commodity and oil prices. Foreign aid has also helped. But it is also due to better economic management, more openness and more stable politics. Such policies mean banks have to work harder to make a profit, but also help them to grow. That is encouraging them to reach out to new customers—and so they should. A report from the World Bank on November 13th argues that promoting access to financial services in Africa should be a priority, as it boosts growth and helps reduce the income gap between rich and poor....MOREAfrica is not the world's dominant force in mining
Africa may be rich in hydrocarbons and mining resources but it is not the dominant force that some investors and speculators have suggested. Indeed, the continent's reliance on natural resources could prove problematic in the longer term.
Hedge funds and stockmarket investors are keen to talk up Africa’s rich natural resource base—understandably, given that they are in the business of promoting the continent as a get-rich-quick investment location. In truth, however, Africa is not as resource-rich as many international investment analysts like to suggest....MORE